State drops EB-5 Dreamlife project

Commerce chief points to 'material misrepresentations' in assisted living plan

Apr. 3, 2013

Written by

Dan D’Ambrosio

Free Press Staff Writer

Secretary of Commerce Lawrence Miller has pulled the plug on an ambitious EB-5 project that proposed to build as many as 10 assisted living homes in Vermont using about $160 million from foreign investors who would receive green cards in return if all went well.

Dreamlife spokesman Phil Mooney told the Burlington Free Press in mid-March that the total cost of the project would be more than $200 million and would create more than 3,000 jobs if all 10 homes were built. As EB-5 projects go, Dreamlife was second only to Jay Peak co-owner Bill Stenger’s $600 million plan for investment in the Northeast Kingdom.

If the cancellation stands, it would mark the first Vermont EB-5 project to not go forward.

On March 27, Miller sent a letter to Mooney canceling a memorandum of understanding executed Nov. 2 between the Agency of Commerce and Community Development and EB-5 American Dream Fund I, LLC — the fund that would finance the assisted living homes.

Miller wrote that the agency’s Vermont Regional Center, which runs the state’s EB-5 program, had encountered a “growing number of questions and issues” as it became familiar with various aspects of the Dreamlife project. Miller goes on to detail what he said are a number of “material misrepresentations” by American Dream Fund in the memorandum of understanding.

Mooney told the Free Press on Wednesday he had responded to the letter from Miller on April 2 and that the cancellation was a “complete and total mistake.” Mooney said Dreamlife had been “open and transparent about everything.”

In his letter, Miller detailed the misrepresentations he said American Dream Fund has made, including one in the memorandum of understanding that identified a Florida-based limited liability corporation, USMS Team LLC, as legal counsel. Miller says the state’s research showed that none of the active officers in USMS Team were licensed to practice law in Florida.

“Representing to the State of Vermont that USMS Team LLC was a law practice capable of assuring compliance with the significant legal requirements of the EB5 program constitutes a material breach of that term of the MOU,” Miller writes.

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Miller goes on to identify three “trade professionals” — Thomas Leytham, a Montpelier architect, Carl Childs, a Williston structural engineer, and Edward Pearson of Pearson & Associates in Stowe — who were listed by American Dream Fund as part of the “Dream Life Project Team” on the Dream Life website.

“We have learned that professionals you have listed as part of the Dream Life Project Team did not know ADFI had listed them as participants,” Miller wrote.

Further, Miller said that on trips abroad to solicit investors, Mooney “personally directed prospective investors to ADFI’s website where these material misrepresentations of the composition of its Construction Team have been posted.”

Miller said the misrepresentations surrounding American Dream Fund’s legal counsel and construction team not only breached the terms of the memorandum of understanding, but also caused the state to “lose confidence” in American Dream Fund.

“Based on the nature and significance of the examples of material breach, we do not foresee ADFI being able to cure them or remedy the broken trust,” Miller writes.

In his April 2 response to Miller, Mooney writes that he “repeatedly told” Brent Raymond, director of the Vermont Regional Center, that USMS Team LLC was not a law firm, but was assured “this didn’t matter.”

Raymond disputed Mooney’s account on Wednesday, calling it “totally incorrect.” He said the memorandum of understanding required Dreamlife to list an attorney, and that they listed USMS Team LLC.

In his rebuttal, Mooney also includes a copy of a March 29 letter from architect Thomas Leytham to Miller, in which Leytham says he was “fully aware” that his resume was posted on the Dreamlife website. A copy of an email from structural engineer Carl Childs said he didn’t object to his name being used in marketing material.

“I understand the situation that funding needs to be lined up prior to signing contracts, etc.,” Childs wrote. “However, I will say that I may not have time to do the work when/if a projects goes ahead; it all depends on my schedule when that happens.”

Raymond told the Free Press on Wednesday that a previous memorandum of understanding with Dreamlife was canceled in September because it had been “sitting on the shelf for quite some time,” and because a new economic impact report had “broadened the parameters” of the projects from what the initial approval was based on.

A rebuttal of that cancellation led to a new memorandum of understanding in November, Raymond said, based largely on the involvement of Mooney as the head of the consortium in place of Richard Parenteau, who had led the previous consortium.

“He had an outstanding record and background,” Raymond said of Mooney. “They basically tightened up their documents, tightened up control of investors’ funds and made reassurances of many things that provided us with enough comfort level to consider reinstating.”

Now that November 2012 memorandum of understanding has been canceled as well.